US and Europe look toward tier-2 and 3 cities for IT services

Global interest in Indian IT companies is not restricted to only large and medium-sized companies based in metros. Smaller IT firms based in tier-2 and tier-3 cities are also earning a large chunk of their revenue from global markets, especially the US and Europe.

Experion Technologies based in Trivandrum gets about 75% of its business from Europe and the US. Established in 2006, Experion provides software product engineering services to clients worldwide, said Binu Jacob, MD and CEO.

The company currently has an employee count of over 1,500, and approximately, 80% of them work from Trivandrum and Kochi. Explaining the logic to start out from a smaller city, Jacob said, “We have always believed that Kerala had an incredible talent pool waiting to be tapped. The IT industry is like a check dam; we can pool in incredible talent and retain them here. This became a rightly-timed opportunity when the tech boom started. Initially, there wasn’t a lot of investment in this sector, but now things have really picked up.”

Kovai, based out of Coimbatore, is a bootstrapped and profitable SaaS company specialising in enterprise integration and knowledge management space. Saravana Kumar, founder and CEO, Kovai.co, said the US market gives the company about 45% of its revenue, and Europe about 35%. The balance comes from the rest of the world.

“While traditionally Tier-1 cities have dominated, from a customer perspective, it doesn’t matter where the service centre is located, provided high-quality services are delivered. So the key issue is recruiting and retaining the right talent,” Kumar said.

He added that Coimbatore boasts of some of the best educational institutions in the country and is becoming more and more attractive for skilled IT workers. “We are competing head on with some of our major competitors based out of the bay area in the US. We personally consider it to be an excellent choice to cater to our global client base.”

The company has about 300 employees, of which 90% are based in Coimbatore. Only key leadership team members and select outbound sales team are based in the UK.
Another cloud-based software application firm, Responsive, founded in 2015, is also based in Coimbatore. The firm helps sales support teams manage various documents, such as RFPs, RFIs, SOWs, security questionnaires and others.

Ganesh Shankar, CEO, Responsive, said, “The North American market currently accounts for the largest chunk of our revenue, while approximately just 10% is generated from other markets such as India, Europe and Australia.”

The company has a global workforce of over 400 employees, with nearly 250 located in India. “Within our Indian workforce, approximately 85% are based in Coimbatore, while the remaining 15% are spread across various other locations in the country,” said Shankar.

Vadodara-based Indusface is an application security SaaS start-up that is also backed by Tata Capital Growth Fund II. Venkatesh Sundar, founder-president (Americas), said about 30% of their business comes from US and Europe.

He added that the requisite talent availability and lower cost of doing business are some factors behind the decision to serve clients from smaller cities. Founded in 2013 at Technopark, Trivandrum, Perfomatix boasted of a 150-strong workforce before being acquired by VRIZE, a prominent US-based technology firm, in February this year.

Today, under the umbrella of VRIZE, the company’s employee headcount has exceeded 400, with operations spanning across various Indian cities, including other smaller cities like Raipur, said Harish Mohan, co-founder, Perfomatix. Harish added the company gets 60% of its revenue from US and the rest from Europe and APAC. Financial Express